Posted by JM-OH on October 13, 2003 at 12:11:04:
In that scenario, for a l/o I would start at 1% of the homes value on a monthly basis. A 100k home would start at around 1k a month rent, rent credits would be negotiable. If my marketing at that price doesn’t bring many interested parties, I’d lower the price or offer higher rent credits, etc.
Just a starting point, not necessarily hard and fast rule.
Need faith in L/O’s… - Posted by Mariam
Posted by Mariam on October 12, 2003 at 20:30:30:
Hi, All!
I have been studying this site for two months now. I have a purchase contract on a house, taking opver payments on a property with about 5k in equity.
It is in an appreciating neighborhood, and only two years old. It is merging with AN INTENSIVELY APPRECIATING AREA. I really want to make this work. I need to.
My payment is on a two-loan basis of about 900.00/mo.
When buyers call on my ad of no bank qual with good dwn:(3-4k, with payments of 1200-1250, with 150.00 twrds purchase, they all dismiss me!) boo-hoo…I know I am whining, but it is only because, I want it to work. I want to believe in what I have studied. I want to succeed. Other ads from investors in the same area, on lease options, I am guessing on some sort of discount term, are about 200.00 below me! That is what I have to make on the mortgage I took over. I am being “requested” to make that earnest money deposit, that I was hoping to acquire from a buyer. I can do that, but I was hoping to see the courses work for me.
It has only been one week of advertising, with few calls. I will make that payment if neccessary. Do you have any advice for me? I have studied. I have bought courses./ I have even invested in Florida, and lost much money at that time. I do not want to fail again, and I need help.
Re: Need faith in L/O’s… - Posted by Brent_Il
Posted by Brent_Il on October 12, 2003 at 21:20:24:
One week is a relatively small time of advertising exposure. I wouldn’t panic just yet.
I don’t want to give the impression that I’ve changed my preference for lease-purchases, but one advantage of doing a straight L/O is that only about one-third, or less, will ever exercise their option. You could try doubling the option credit to $300 a month, or even more, and you have a two out of three chance that the credit will never be used. You face the possibility of little profit, but it would reduce the monthly drain.
Re: Need faith in L/O’s… - Posted by Jim FL
Posted by Jim FL on October 12, 2003 at 21:02:53:
Miriam,
No offense, but if the property has $5k in equity only, I certainly hope it has a value of less than $20k or so.
This is why we all tell folks due diligence and buying right is so important in this business.
Your first duty for due diligence is to verify numbers.
What is a house worth?
What will it rent for?
etc.
Sounds to me like you agreed to pay a seller higher than market rent, and an option price at or very near market value.
What is the value of the home?
$5k in “Equity” really is not much money at all.
Heck, if the house only has $5k in equity, shooting to get $3-4k in cash now, seems a like your taking your profit out now.
What is your tenant/buyers get a loan before 12 months?
Will the home appreciate enough to get you paid more?
Just sounds too skinny for me.
Tell us more, and maybe we can help.
Next time, buy for less than value.
Remember the old adage, “Make your money when you buy” and live by it!
Take care and good luck,
Jim FL
P.S. one week of marketing is really not nearly enough to gauge a response by the way.
Re: Need faith in L/O’s… - Posted by rm
Posted by rm on October 13, 2003 at 10:02:11:
>
If you’re looking at a home where 95% of the homes are owner-occupied and nothing’s currently for rent, do you have a good way of determining “market” rent?
Thanks.